WT/DS344/AB/R
Page 1

World Trade
Organization
WT/DS344/AB/R
30 April 2008
(08-2072)
Original: English

united STATes – final anti-dumping measures
on Stainless Steel from Mexico

AB-2008-1

Report of the Appellate Body

WT/DS344/AB/R
Page 1

I.Introduction

II.Arguments of the Participants and the Third Participants

A.Claims of Error by Mexico – Appellant

1.Simple Zeroing, As Such, in Periodic Reviews

2.Simple Zeroing As Applied in Periodic Reviews

3.Article 11 of the DSU

B.Arguments of the United States – Appellee

1.Simple Zeroing, As Such, in Periodic Reviews

2.Simple Zeroing As Applied in Periodic Reviews

3.Article 11 of the DSU

4.Article 17.6(ii) of the Anti-Dumping Agreement

C.Arguments of the Third Participants

1.Chile

2.European Communities

3.Japan

4.Thailand

III.Issues Raised in This Appeal

IV.Introduction

A.The United States' System for the Imposition and Assessment of Anti-dumping Duties

B.Standard of Review: Article11 of the DSU and Article17.6 of the Anti-Dumping Agreement

V.Simple Zeroing, AsSuch, in Periodic Reviews

A.Are "Dumping" and "Margin of Dumping" Exporter- or Importer-related Concepts?

B.Can "Dumping" and "Margin of Dumping" Be Found to Exist at the Level of a Transaction?

C.Is It Permissible to Disregard the Amount By Which the Export Price Exceeds the Normal Value?

D.Periodic Reviews and Importer-specific Duty Assessment

E.The Panel's Arguments Relating to Alleged Administrative Burden

F.Arguments Relating to Prospective Normal Value Systems

G.The Panel's Contextual Arguments Relating to the Second Sentence of Article2.4.2 of the Anti-Dumping Agreement

H.Historical Background

I.Conclusion

VI.Simple Zeroing As Applied in Periodic Reviews

VII.Article2.4 of the Anti-Dumping Agreement

VIII.Mexico's Claim under Article11 of the DSU Concerning the Panel's Failure to Follow Previous Adopted Appellate Body Reports Addressing the Same Issues

A.The Panel's Findings and Mexico's Appeal

B.Analysis

IX.Time-limits for Filing Submissions

X.Findings and Conclusions

ANNEX INotification of an Appeal by Mexico

CASES CITED IN THIS REPORT

Short Title / Full case title and citation
EC – Audio Cassettes / Panel Report, EC – Anti-Dumping Duties on Audio Tapes in Cassettes Originating in Japan, ADP/136, 28April1995, unadopted
EC – Bed Linen / Appellate Body Report, European Communities – Anti-Dumping Duties on Imports of Cotton-Type Bed Linen from India, WT/DS141/AB/R, adopted 12March 2001, DSR2001:V, 2049
EC – Bed Linen / Panel Report, European Communities – Anti-Dumping Duties on Imports of Cotton-Type Bed Linen from India, WT/DS141/R, adopted 12March 2001, as modified by Appellate Body Report, WT/DS141/AB/R, DSR2001:VI, 2077
EC – Bed Linen
(Article 21.5 – India) / Appellate Body Report, European Communities – Anti-Dumping Duties on Imports of Cotton-Type Bed Linen from India – Recourse to Article 21.5 of the DSUby India, WT/DS141/AB/RW, adopted 24April 2003, DSR2003:III, 965
EC – Chicken Cuts / Appellate Body Report, EuropeanCommunities – Customs Classification of Frozen Boneless Chicken Cuts, WT/DS269/AB/R, WT/DS286/AB/R, and Corr.1, adopted 27September 2005, DSR 2005:XIX, 9157
EC – Tube or Pipe Fittings / Panel Report, European Communities – Anti-Dumping Duties on Malleable Cast Iron Tube or Pipe Fittings from Brazil, WT/DS219/R, adopted 18August 2003, as modified by Appellate Body Report, WT/DS219/AB/R, DSR2003:VII, 2701
EEC – Cotton Yarn / Panel Report, European Economic Community – Imposition of Anti-Dumping Duties on Imports of Cotton Yarn from Brazil, ADP/137, adopted 30October1995, BISD42S/17
India – Patents (US) / Appellate Body Report, India – Patent Protection for Pharmaceutical and Agricultural Chemical Products, WT/DS50/AB/R, adopted 16January 1998, DSR1998:I, 9
Japan – Alcoholic Beverages II / Appellate BodyReport, Japan – Taxes on Alcoholic Beverages, WT/DS8/AB/R, WT/DS10/AB/R, WT/DS11/AB/R, adopted 1November 1996, DSR1996:I, 97
US – Anti-Dumping Measures on Oil Country Tubular Goods / Appellate Body Report, United States – Anti-Dumping Measures on Oil Country Tubular Goods (OCTG) from Mexico, WT/DS282/AB/R, adopted 28November 2005, DSR 2005:XX, 10127
US – Corrosion-Resistant Steel Sunset Review / Appellate Body Report, United States – Sunset Review of Anti-Dumping Duties on Corrosion-Resistant Carbon Steel Flat Products from Japan, WT/DS244/AB/R, adopted 9January 2004, DSR2004:I, 3
US – Hot-Rolled Steel / Appellate Body Report, United States – Anti-Dumping Measures on Certain
Hot-Rolled Steel Products from Japan, WT/DS184/AB/R, adopted 23August 2001, DSR2001:X, 4697
US – Oil Country Tubular Goods Sunset Reviews / Appellate Body Report, United States – Sunset Reviews of Anti-Dumping Measures on Oil Country Tubular Goods from Argentina, WT/DS268/AB/R, adopted 17December 2004, DSR 2004:VII, 3257
US – Shrimp
(Article 21.5 – Malaysia) / Appellate Body Report, United States – Import Prohibition of Certain Shrimp
and Shrimp Products – Recourse to Article 21.5 of the DSU by Malaysia, WT/DS58/AB/RW, adopted 21November 2001, DSR2001:XIII, 6481
US – Shrimp (Ecuador) / Panel Report, United States – Anti-Dumping Measure on Shrimp from Ecuador, WT/DS335/R, adopted on 20 February 2007
US – Softwood Lumber V / Appellate Body Report, United States – Final Dumping Determination on Softwood Lumber from Canada, WT/DS264/AB/R, adopted 31August 2004, DSR2004:V, 1875
US – Softwood Lumber V / Panel Report, United States – Final Dumping Determination on Softwood Lumber from Canada, WT/DS264/R, adopted 31August 2004, as modified by Appellate Body Report, WT/DS264/AB/R, DSR2004:V, 1937
US – Softwood Lumber V
(Article 21.5 – Canada) / Appellate Body Report, United States – Final Dumping Determination on Softwood Lumber from Canada – Recourse to Article 21.5 of the DSU by Canada, WT/DS264/AB/RW, adopted 1 September 2006
US – Stainless Steel (Mexico) / Panel Report, United States – Final Anti-Dumping Measures on Stainless Steel from Mexico, WT/DS344/R, circulated to WTO Members 20 December 2007
US – Zeroing (EC) / Appellate BodyReport, United States – Laws, Regulations and Methodology for Calculating Dumping Margins ("Zeroing"), WT/DS294/AB/R, adopted 9May 2006, and Corr.1
US – Zeroing (EC) / Panel Report, United States – Laws, Regulations and Methodology for Calculating Dumping Margins ("Zeroing"), WT/DS294/R, adopted 9May 2006, as modified by Appellate Body Report, WT/DS294/AB/R
US – Zeroing (Japan) / Appellate Body Report, United States – Measures Relating to Zeroing and Sunset Reviews, WT/DS322/AB/R, adopted 23 January 2007
US – Zeroing (Japan) / Panel Report, United States – Measures Relating to Zeroing and Sunset Reviews, WT/DS322/R, adopted 23 January 2007, as modified by Appellate Body Report, WT/DS322/AB/R

ABBREVIATIONS USED IN THIS REPORT

Abbreviation / Description
1960 Group of Experts Report / GATT Second Report of the Group of Experts, Anti-Dumping and Countervailing Duties, GATT Document L/1141, adopted 27 May 1960, BISD 9S/194
Anti-Dumping Agreement / Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994
DSB / Dispute Settlement Body
DSU / Understanding on Rules and Procedures Governing the Settlement of Disputes
GATT 1947 / General Agreement on Tariffs and Trade 1947
GATT 1994 / General Agreement on Tariffs and Trade 1994
Kennedy Round AntiDumping Code / Kennedy Round Agreement on Implementation of Article VI of the General Agreement on Tariffs and TradeTN.64/98, 20 June 1967
Panel / Panel in United States – Final Anti-Dumping Measures on Stainless Steelfrom Mexico
Panel Report / Panel Report, United States – Final Anti-Dumping Measures on Stainless Steel from Mexico, WT/DS344/R
SAA / Uruguay Round Agreements Act, Statement of Administrative Action, H.R. Doc. No.103-316 (1994), reprinted in 1994 USCAAN 3773, 4040 (Public Law No.103-465, 108 Stat. 4809 (1994), United States Code, Title19, Section 3501)
Tariff Act / United States Tariff Act of 1930, Public Law No. 1202-1527, 46 Stat. 741, United States Code, Title 19, as amended
Tokyo Round Anti-Dumping Code / Tokyo Round Agreement on Implementation of ArticleVI of the General Agreement on Tariffs and Trade, BISD26S/171, entered into force 1January 1980
T-T / Transaction-to-transaction (comparison) in original investigations
USDOC / United States Department of Commerce
USITC / United States International Trade Commission
Vienna Convention / Vienna Convention on the Law of Treaties, done at Vienna, 23May 1969, 1155 UNTS 331; 8 International Legal Materials 679
Working Procedures / Working Procedures for Appellate Review, WT/AB/WP/5, 4January 2005
W-T / Weighted average-to-transaction (comparison) in original investigations
WTO / World Trade Organization
WTOAgreement / Marrakesh Agreement Establishing the World Trade Organization
W-W / Weighted average-to-weighted average (comparison) in original investigations

WT/DS344/AB/R
Page 1

World Trade Organization

Appellate Body

United States–Final Anti-Dumping Measures on Stainless Steel from Mexico
Mexico, Appellant
United States, Appellee
Chile, Third Participant
China, Third Participant
European Communities, Third Participant
Japan, Third Participant
Thailand, Third Participant / AB-2008-1
Present:
Ganesan, Presiding Member
Bautista, Member
Sacerdoti, Member

I.Introduction

  1. Mexico appeals certain issues of law and legal interpretations developed in the Panel Report, United States – Final Anti-Dumping Measures on Stainless Steel from Mexico (the "Panel Report").[1] The Panel was established to consider a complaint by Mexico concerning the calculation of margins of dumping by the United States Department of Commerce (the "USDOC") based on a methodology that does not fully reflect export prices that are above normal value.[2]
  2. Before the Panel, Mexico claimed that:

(a) "model zeroingin investigations"[3]is,as such, inconsistent with Articles VI:1
and VI:2 of the General Agreement on Tariffs and Trade 1994 (the "GATT1994"), Articles 2.1, 2.4,2.4.2, and 18.4 of the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 (the "Anti-Dumping Agreement"), and Article XVI:4 of the Marrakesh Agreement Establishing the World Trade Organization (the "WTO Agreement")[4];

(b) model zeroing, as applied in the original investigation at issue in this dispute[5],is inconsistent with Articles VI:1 and VI:2 of the GATT 1994, Articles 2.1, 2.4, 2.4.2, and 18.4 of the Anti-Dumping Agreement, and Article XVI:4 of the WTO Agreement[6];

(c) "simple zeroing in periodic reviews"[7] is,as such, inconsistent with Articles VI:1
and VI:2 of the GATT 1994, Articles 2.1, 2.4, 9.3, and 18.4 of the Anti-Dumping Agreement, and Article XVI:4 of the WTO Agreement[8]; and

(d)simple zeroing, as applied in the five periodic reviews at issue in this dispute[9], is inconsistent with Articles VI:1 and VI:2 of the GATT 1994, Articles 2.1, 2.4, 9.3,
and 18.4 of the Anti-Dumping Agreement, and Article XVI:4 of the WTO Agreement.[10]

  1. In the Panel Report, circulated to Members of the World Trade Organization (the "WTO") on 20December 2007, the Panel found that "model zeroing in investigations" is,assuch, inconsistent with Article2.4.2 of the Anti-Dumping Agreement[11], and that theUSDOC acted inconsistently with this provision by using model zeroing in the original investigation at issue.[12] However, the Panel found that "simple zeroing in periodic reviews" is not,as such, inconsistent with Articles VI:1 andVI:2 of the GATT 1994 and Articles2.1, 2.4, and9.3 of the Anti-Dumping Agreement, and that, accordingly, the USDOC did not act inconsistently with these provisions by using simple zeroing in the five periodic reviews at issue.[13]
  2. On 31 January 2008, Mexico notified the Dispute Settlement Body (the "DSB") of its intention to appeal certain issues of law covered in the Panel Report and certain legal interpretations developed by the Panel, pursuant to Article 16.4 of the Understanding on Rules and Procedures Governing the Settlement of Disputes (the "DSU"), and filed a Notice of Appeal[14] pursuant to Rule20 of the Working Procedures for Appellate Review[15](the "Working Procedures"). On 7 February 2008, Mexico filed an appellant's submission.[16] On 25 February 2008, the United States filed an appellee's submission[17], and Chile, the European Communities, Japan, and Thailand each filed a third participant's submission.[18] On the same day, Chinanotified its intention to attend the oral hearing as a third participant.[19]
  3. By letter dated 8 February 2008, Mexico requested authorization from the Appellate Body to correct a clerical error in its appellant's submission, and two clerical errors in the executive summary of that submission, pursuant to Rule18(5) of the Working Procedures. On 12 February 2008, the Appellate Body Division hearing the appeal invited the United States and the third participants to comment onMexico's request. No objections to Mexico's request were received and, on 14February 2008, the Division authorized Mexico to correct the identified clerical errors.
  4. The oral hearing in this appeal was held on 6 March 2008. The participants and the third participants,with the exception of China,made oral statements and responded to questions posed by the Members of the Division hearing the appeal.
  5. During the course of the appeal, the Division received a request pertaining to a procedural matter. By letter dated 3March 2008, the European Communities requested the Appellate Body to clarify whether the United States' appellee's submission was considered to be filed with the Appellate Body within the meaning of Rule 18(1) of the Working Procedures. The European Communities pointed out that the Working Schedule for this appeal, communicated to the parties on 1February 2008, provided for the United States' appellee's submission to be filed byMonday, 25February 2008, at 5:00p.m. However, the electronic version of the United States' appellee's submission was sent to the Appellate Body by e-mail only at 7:56p.m., and the European Communities presumes that printed copies were delivered to the Appellate Body after that time. As a result, the United States"had significant time to examine the filings of the Third Participants and eventually adjust its own submission prior to filing."[20] At the oral hearing, the European Communities reiterated its request that the Appellate Body clarify whetherit considers the United States' appellee's submission to be filed within the meaning of Rule 18(1) of the Working Procedures, and what the consequences are, if any, of a late filing.[21]

II.Arguments of the Participants and the Third Participants

A.Claims of Error by Mexico – Appellant

1.Simple Zeroing, As Such, in Periodic Reviews

(a)ArticlesVI:1 and VI:2 of the GATT 1994 and Articles 2.1 and 9.3 of the Anti-Dumping Agreement
  1. Mexico submits that the Panel erred in finding that simple zeroing in periodic reviews is not, assuch, inconsistent with ArticlesVI:1 andVI:2 of the GATT1994 and Articles2.1 and9.3 of the Anti-Dumping Agreement. Mexicorequests the Appellate Body to reverse this finding and to find, instead, that simple zeroing in periodic reviews is, assuch, inconsistent with these provisions. Mexico's appeal is based on several arguments.
  2. First, Mexico argues that, in any anti-dumping proceeding—includingperiodic reviews under Article9.3 of the Anti-Dumping Agreement—"themargin of dumping must be calculated in respect of individual exporters or foreign producers subject to such proceeding and for the product under consideration taken as a whole."[22] Once the authorities define the product under consideration, the scope of that definition also determines the scope of the authorities' dumping determination. Therefore, dumping as defined in the GATT1994 and the Anti-Dumping Agreementcannot exist in relation to a specific type, model, or category of the product under consideration or in relation to individual export transactions. It follows that, when the calculation of dumpinginvolvesmultiple comparisons between normal value and export price, the results of the intermediate comparisons are not "margins of dumping" but, rather,"inputs to be taken into account in the determination of the margin of dumping for the product under consideration as a whole for each known exporter or foreign producer."[23] This is also borne out by the context provided by Articles6.10, 9.4, and 9.5 of the AntiDumping Agreement. On this basis, Mexico argues that Article9.3 requires investigating authorities to aggregate the results of all the comparisons when calculating the overall margin of dumping,and that the results of intermediate comparisons cannot be selectively ignored or disregarded. By contrast, the Panel's "reasoning"[24] inappropriately permits margins of dumping to be
    defined differently under different contexts or systems of administration, which is contrary to the uniform definition of "dumping"provided for in Article2.1 of the AntiDumping Agreement.
  3. Secondly, Mexico contends that the Panel erred by concluding that anti-dumping measures are concerned with the pricing behaviour of importers in relation to individual import transactions. For Mexico, there is no support for such a conclusion in the text or context of the relevant agreements. As the Appellate Body has confirmed,margins of dumping do not exist for individual importers or transactions but, rather, they are related to the pricing behaviour of exporters and foreign producers with respect to their exports of the product under consideration.[25] Mexico rejects the Panel's reliance on ArticleVII of the GATT1994 in support of the proposition that the word "product" may be interpreted on a transaction-specific basis. That Articleis concerned with the amount of customs duties to be applied on each import transaction, and therefore it provides an "entirely different"[26] context to the term "product" than the one provided for in Article VI, which is concerned with the pricing behaviour of exporters and foreign producers. Mexico also emphasizes that the Panel's interpretation of the term "product" cannot be reconciled with the investigating authority's duty to make an injury determination on the basis of all the sales made by an exporter or foreign producer of that product.
  4. In addition, Mexico suggests that, by referring to an importer's margin of dumping, a concept for which there is no textual support in the Anti-Dumping Agreement, the Panel mistakenly equated the system for collection of anti-dumping duties from individual importers with the rules that must be followed for calculating margins of dumping forindividual exporters. According to Mexico, liability to pay anti-dumping duties may be based on a specific transaction. However, the rate and amount of that payment is subject to the ceiling provided in Article9.3, which is the margin of dumping calculated for the exporter or foreign producer under Article2 of the Anti-Dumping Agreement. Mexico characterizes as "factually incorrect"[27] the Panel's assertion that the obligation to pay anti-dumping duties is not incurred on the basis of a comparison of an exporter's total sales but,rather, on the basis of an individual sale between the exporter and its importer.
  5. Thirdly, Mexico argues that the Panel erred in concluding that the existence of a "prospective normal value" system under Article 9.4(ii) of the Anti-Dumping Agreement lends contextual support to the view that "'anti-dumping duties can be determined on a transaction-specific basis' under retrospective systems such as that employed by the United States."[28] The Panel's contextual arguments erroneously conflate the amount of duty that is permitted to be collected from the importer under a prospective normal value system and the exporter's "margin of dumping". The Appellate Body has consistently distinguished between these two distinct concepts.[29] According to Mexico, "itis precisely because the amount of duties collected from importers under a prospective normal value system may differ from the actual 'margin of dumping' of the exporter or producer, that Article9.3.2 requires an opportunity for a review."[30] While the Anti-Dumping Agreement provides for flexibility in the structure of such collection systems, all such systems are subject to the limitation in Article9.3 that anti-dumping duties collected from the importers "shall not exceed the margin of dumping established under Article 2", for the exporter or foreign producer concerned.
  6. Fourthly, Mexico disputes the relevance to this proceeding of the Panel's findings concerning the purported "mathematical equivalence" in the results that would be obtained in the absence of zeroing under the weighted average-to-weighted average ("W-W") comparison methodology provided for in the first sentence of Article2.4.2 of the Anti-Dumping Agreement and the weighted average-to-transaction ("W-T") comparison methodology provided for in the second sentence of Article2.4.2.